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The Decline of Poverty: Contemporary Trends
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Source: U.S. Bureau of the Census, American Housing Survey for the United States in 1997; U.S. Bureau of the Census, "Housing Then and Now," LINKED HERE; and Historical Statistics of the United States, Series Q 175.
Despite various impediments to positive institutional change in many nations, heightened competition spurred by the information revolution and spread of political and economic participation worldwide bode well for people previously cut off from the path out of poverty. In this regard, it is important to emphasize that economic growth, where it has taken hold, has benefited all layers of society. In the U.S., the rise in material affluence was so great and widespread in the twentieth century that individuals the government currently labels “officially poor” have incomes surpassing those of average Americans in 1950 and all but the richest (top 5 percent) in 1900. The poverty income level in the United States, about one fourth the U.S. average, is far higher than average per capita incomes in most of the rest of the world. To show how widespread the gains from economic growth have been, Figure 2 lists items owned or used by average households in the United States in 1950 compared to below poverty threshold Americans today. Air-conditioned homes with electricity, a refrigerator, a flush toilet, television and telephones are common even among poor Americans. Indeed, American households listed below the poverty level today are more likely to own a color television set than an average household in Italy, France or Germany. In short, the substantial gap among income classes as measured by income and especially wealth becomes much narrower when measured by basic categories: food, housing, and items and services for comfort and entertainment. In the United States there are more radios owned than ears to listen to them.
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Source: Dollar 2003
Lest the relative wealth of the American poor seem an exception, it is important to note that the path out of poverty is now being traveled by greater and greater proportions of the world’s population. While the $1 per day (current real purchasing power) threshold value, used by economists and other development specialists as an absolute standard of extreme poverty, is in sharp contrast to the relative wealth of America’s poor, it should not distract us from the reality that poverty in the world is declining. Figure 3 shows that the share of the world population living in extreme poverty – that is, below the $1 per day threshold – has been falling for almost two centuries. The long decline pictured in Figure 3 bears the good news that the battle against poverty made headway even as world population grew. Figure 4 shows that in recent decades the decline in proportion has finally led to a decline in absolute numbers. There are fewer poor people in the world today than there were 20 years ago.
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Source: Dollar 2003